SHAH -V- HSBC (APPEAL)

Shah v HSBC Private Bank Ltd ([2009] EWHC 79 (QB) Hamblen J) is the first major case since the Court of Appeal's decision in K Limited v National Westminster Bank plc where a customer has sought to challenge a bank's decision to refuse to execute payment instructions, the bank having harboured suspicion about the funds in the account. The case raised a number of points of public importance:

  • To what extent do the anti-money laundering provisions under Part 7 POCA exclude a banker's liability for damages arising from a breach of contractual duty
    (i) to honour its mandate
    (ii) to take reasonable care and
    (iii) to provide information to its customers
  • Whether the test for suspicion under section 327 - 329 POCA includes "irrational" suspicion

The claim was dismissed at first instance. Given the case raised issues of general public importance, the Claimants have been given permission to appeal.